OEE: Frequently Asked Questions

We added a new page to our site to address some of the more frequently asked questions (FAQ’s) we receive regarding OEE. We trust you will find this information to be of interest as you move forward on your lean journey. We always appreciate your feedback, so feel free to leave us a comment or send an e-mail directly to LeanExecution@gmail.com or Vergence.Consulting@gmail.com

We have had an incredibly busy summer as more companies are pursuing lean manufacturing practices to improve their performance. OEE has certainly been one of the core topics of discussion. We have found that more companies are placing a significant emphasis on Actual versus Planned performance. It would seem that we are finally starting to realize that we can introduce a system of accountability that leads to improvements rather than reprimands.

Keep Your Data CLEAN

One of the debates we recently encountered was quantity versus time driven performance data when looking at OEE data. The argument was made that employees can relate more readily to quantities than time. We would challenge this as a matter of training and the terminology used by operations personnel when discussing performance. We recommend using and maintaining a time based calculation for all OEE calculations. Employees are more than aware of the value of their time and will make every effort to make sure that they get paid for their time served.

Why are we so sure of this? Most direct labour personnel are paid an hourly rate. Make one error on their pay or forget to pay their overtime and they will be standing in line at your office wondering why they didn’t get paid for the TIME they worked. They will tell you – to the penny – what their pay should have been. If you are paying a piece rate per part, you can be sure that the employees have already established how many parts per hour they need to produce to achieve their target hourly earnings.

As another point of interest and to maintain consistency throughout the company, be reminded that finance departments establish hourly Labour and Overhead rates to the job functions and machines respectively. Quite frankly, the quantity of parts produced versus plan doesn’t really translate into money earned or lost. However, one hour of lost labour and everyone can do the math – to the penny.

When your discussing performance – remember, time is the key. We have worked in some shops where a machine is scheduled to run 25,000 parts per day while another runs a low volume product or sits idle 2 of the 5 days of the the week. When it comes right down to the crunch for operations – how many hours did you earn and how many hours did you actually work.

Even after all this discussion we decided it may be an interesting exercise to demonstrate the differences between a model based on time versus one based (seemingly) only on Quantitative data. We’ll create the spreadsheet and make it available to you when its done!

Remember to take advantage of our free spreadsheet templates. Simply click on the free files in the sidebar or visit our free downloads page.